Industry participants include both incumbent and competitive local exchange carriers. The local exchange industry is comprised of a few large, well-known companies, including the four regional Bell operating companies, several mid-sized companies, and hundreds of relatively small independent companies.

Incumbent local exchange carriers were the providers of local service in their service territories prior to the passage of the federal Telecom Act and have generally retained local service obligations. The Telecom Act, which amended the Communications Act, substantially changed the regulatory structure applicable to the telecommunications industry, with a stated goal of stimulating competition for virtually all telecommunications services, including local telephone service, long distance service and enhanced services.

Large incumbent local exchange carriers generate the vast majority of the nation’s local exchange revenues and provide a majority of the nation’s access lines. A majority of the mid-sized and small incumbent local exchange carriers operate in rural areas and are referred to as rural local exchange carriers. Rural local exchange carriers generally experience stable revenues and predictable cash flows due to their stable customer bases and limited wireline competition.

Interexchange carriers generally provide long distance services between telephone users, often using local exchange carriers networks to originate and terminate calls. These interexchange carriers operate interconnected networks that comprise, together with the local exchange carriers, a system referred to as the public switched telephone network.

The Company provides long distance voice services under its own brand names in each of its franchised territories. The Company bundles its long distance service with other custom calling features.

The Company provides broadband services and dial-up Internet services in its franchised territories. The Company’s broadband service provides high-speed access to the Internet at multi-megabit upload and download speeds.

In markets near its franchised territories in Illinois and North Carolina, the Company provides local, long distance and high-speed data services primarily to medium and large businesses. In addition, as part of its edge-out services, the Company maintains and markets a fiber transport and Internet egress business to customers primarily in the Southeast region of the United States.

The Company’s directory service provides telephone directories in its franchised territories that consist of residential and business white and yellow page listings and advertisements. The Company currently produces eight different directories in its service areas and intends to combine the three smallest directories with larger directories providing coverage to nearby or adjacent market areas.

Total operating expenses increased approximately $2.7 million from $62.3 million, or 66.1% of total revenues in the first six months of 2005, to $65.0 million, or 66.0% of total revenues in the first six months of 2006.

Cost of services and sales increased approximately $2.9 million, or 11.1%, to $29.3 million in the first six months of 2006 from $26.4 million in the first six months of 2005.

Net operating income increased approximately $1.5 million to $33.5 million, or 34.0% of total revenues in the first six months of 2006 from $32.0 million, or 33.9% of total revenues in the first six months of 2005.

Interest expense decreased $6.4 million, or 22.6% to $22.1 million, or 22.4% of total revenues, in the first six months of 2006 from $28.5 million, or 30.3% of total revenues, in the first six months of 2005.

Net income was $15.2 million in the first six months of 2006, a change of $30.9 million from net loss of $15.7 million in the first six months of 2005.